According to the CJEU, e-commerce platforms such as Amazon should not be liable for the infringement of trademark rights when they merely store counterfeit goods on behalf of third-party sellers, provided they are not aware of the infringement and they do not offer or market the counterfeit goods themselves.
Background
With the ruling issued on April 2, 2020, in Case C-567/18 (Coty v Amazon, the “Decision”), the Court of Justice of the European Union (“CJEU”) affirmed that a person who merely stores goods on behalf of a third party, without being aware that they infringe trademark rights, shall not be liable for trademark infringement as they do not pursue the aim of offering or putting them on the market.
The Decision is the result of a referral by the German Federal Court of Justice (the “Federal Court”) in the proceedings between Coty Germany GmbH (“Coty”), a distributor of perfumes and holder of a license for the EU trademark “Davidoff” (the “Trademark”), and four entities of the Amazon group (jointly, “Amazon”), the well-known e-commerce platform.
Having carried out a test purchase on Amazon Marketplace — a section of the Amazon platform where third-party sellers may offer their goods for sale — Coty found that third-party sellers thereby put on the market perfumes bearing the Trademark without its authorization. In response to Coty’s request to provide the name and address of one of these infringers, Amazon replied that it was not in a position to comply. Therefore, Coty sued Amazon for trademark infringement.
Both the competent German courts in the first and second instances dismissed Coty’s demands, stating that Amazon had neither stocked nor dispatched the goods in question and that it had kept them on behalf of third-party sellers. Hence, Coty brought an appeal before the Federal Court. According to the latter, the decision on whether Amazon is liable as a perpetrator of infringement of trademark rights depends on the interpretation given to Article 9 (2) (b) of Regulation 2009/207 and Article 9 (3) (b) of Regulation 2017/1001 (collectively, the “Applicable Provisions”).[1] Therefore, the Federal Court asked the CJEU whether a person who, on behalf of a third party, stores goods that infringe trademark rights without having knowledge of that infringement and stocks those goods for the purpose of offering them or putting them on the market shall be considered a trademark infringer in a case in which it is not that person but rather the third party alone that intends to offer the goods for sale or put them on the market.
The reasoning of the CJEU
Firstly, the CJEU notes that, as stated on other occasions,[2] the Applicable Provisions set out a non-exhaustive list of the types of use that may be prohibited by a trademark owner under Article 9 (1) of Regulation 2009/207 and Article 9 (2) of Regulation 2017/1001.[3] Among these uses, letter (b) mentions “offering the goods, putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder.”
According to what the Federal Court observed in the main proceedings, Amazon merely stored the goods without offering them for sale or putting them on the market itself, and without aiming to do so. In light of that, the CJEU wonders whether such a storage operation may be regarded as “stocking the goods” for the purposes of selling them or putting them on the market, and therefore as “using the trademark.”
Even though neither Regulation 2009/207 nor Regulation 2017/1001 define the concept of “using”, the CJEU notes that some indications in this regard may be found in its past case-law. Among other points, the Court recaps the following:
- the expression “using” involves active behavior and direct or indirect control of the act constituting the use and, as a result, the non-exhaustive lists set forth in the applicable regulations exclusively refer to any active behavior on the part of the third party;[4]
- only a third party that has (direct or at least indirect) control over the act that constitutes the use is effectively able to stop that use and, therefore, comply with the relevant prohibition;[5]
- creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service is itself “using” the sign.[6]
Because Amazon’s conduct was limited to the storage of the goods in question on behalf of the third-party infringers, without being aware that they were counterfeit and without pursuing the aim of offering or putting them on the market, the CJEU concludes that the platform has no liability under the Applicable Provisions.
Amazon’s potential liability under the E-commerce Directive
It is worth noting that the CJEU did not exclude the possibility that, as an intermediary, Amazon may be found liable as a service provider under Article 14 (1) of Directive 2000/31,[7] or as an infringer under the first sentence of Article 11 of Directive 2004/48,[8] given that it is an economic operator that has enabled another operator to make use of a trademark.
Although the CJEU identified these issues, it did not (and could not) assess them because they had not been raised by the Federal Court as referred questions.
Conclusions
The ruling at stake is good news for the current and increasing number of e-commerce platforms, as it limits their liability for trademark infringement in relation to the offering by third-party sellers of counterfeit products on their marketplaces to cases in which they have control over the subsequent and final phases of the distribution chain in retail and are not unaware of the infringement. However, these players should bear in mind that, as noted by the CJEU, platforms may nonetheless be found liable under other provisions, such as those laid down in Directive 2000/31.
[1] Article 9 (2) (b) of Regulation (EU) 2009/207 “on the Community trade mark,” later replaced by Article (3) (b) of Regulation (EU) 2017/1001 “on the European Union trade mark,” provides that a trademark proprietor may inter alia prohibit third parties from “offering the goods, putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder.”
[2] See, inter alia, case C-236/08 Google France, paragraph 65.
[3] Article 9 (1) of Regulation (EU) 2009/207, later replaced by Article 9 (2) of Regulation 1001/2017, provides the cases in which a proprietor of a trademark shall be entitled to prevent all third parties not having his consent from using it in the course of trade.
[4] See case C-179/15 “Daimler,” paragraphs 39 and 40, and case C-129/17 “Mitsubishi,” paragraph 38.
[5] See case C-179/15 “Daimler,” paragraph 41.
[6] See case C-236/08 “Google France,” paragraph 57.
[7] Pursuant to Article 14 (1) of Directive (EU) 2000/31 “on electronic commerce,” “where an information society service is provided that consists of the storage of information provided by a recipient of the service, Member States shall ensure that the service provider is not liable for the information stored at the request of a recipient of the service, on condition that:
(a) the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; or
(b) the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information.”
[8] Pursuant to Article 11 of Directive (EU) 2004/48 “on the enforcement of intellectual property rights,” “Member States shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement”.
